1. Take Charge of Credit Cards
Slide 1: Take Charge of Credit Cards
i. Explain to participants that today they will learn all about credit cards and how to use them in a positive manner to avoid “becoming one of the statistics.”
Introductory Level

2. What is Credit?
Credit- something is received in exchange for a promise to pay back money in the future
Borrower
Lender
Gives borrower credit if they believe money will be paid back
Pays back money PLUS interest to lender
Requests credit from lender
Receives goods, services, or money
b. Slide 2: What is Credit?
i. In groups, ask participants to discuss what they believe credit is.
ii. Discuss the definition of credit as a class. Emphasize the agreement or “promise” that is made. Credit is not free money; you are obligated to pay back the money.
iii. Explain to participants that when using credit not only do you have to pay back the money, but you also have to pay interest.

3. When referring to credit, interest is the charge for borrowing money
What is Interest?
Interest is the price of money
When referring to credit, interest is the charge for borrowing money
c. Slide 3: What is Interest?
i. Ask participants to discuss within their groups what they believe interest is.
ii. Discuss the definition of interest as a class.

4. Credit Limit- maximum amount of money that can be charged on the card
What is a Credit Card?
Plastic card that holds pre-approved credit
Purchase items now
Pay later
d. Slide 4: What is a Credit Card?
i. In groups, ask participants to discuss what a credit card is. How is a credit card different from other types of credit?
ii. Discuss the definition and characteristics of a credit card as a class.
Credit Limit- maximum amount of money that can be charged on the card

5. What do you think is the best payment option?
Credit Card Payments
Make smaller payments- equal or unequal
Pay total amount owed OR
Minimum Payment- minimum amount of a credit card bill that must be paid every month
e. Slide 5: Credit Card Payments
i. Explain to participants that with a credit card, people have different payment options.
ii. Explain to participants that even though they can make unequal monthly payments on a credit card, they are always required to pay a specific minimum amount, known as the minimum payment.
iii. Ask participants to determine which payment option they believe would be the best.
iv. Discuss how the minimum payment amount is usually a very small portion of the total amount due on the credit card.
What do you think is the best payment option?

6. The lower the APR the better for cardholder!
Credit Card Interest
Charged
Each month the amount of money owed is not paid in full
Known as
Annual percentage rate (APR)- interest rate charged on a credit card
f. Slide 6: Credit Card Interest
i. Explain to participants that credit card interest is known as APR.
10%
APR
The lower the APR the better for cardholder!
15%
APR

7. What if only the minimum payment is made every month?
Melissa and Skylar each purchased a plane ticket for $500 using their credit cards that charge 15% APR
Melissa-
Skylar-
Payment
Paid the full amount owed- $500
Paid the minimum payment due- $20
Time to pay off credit card
1 month
3 years
Total amount of interest paid $0
$104
Total amount paid
$500
$604
g. Slide 7: What if only the minimum payment is made every month?
i. Ask participants to discuss within their groups what they believe would happen if only the minimum payment on a credit card was made every month.
ii. Show participants the table illustrating what happens to the same purchase when only the minimum payment is made versus paying the entire balance on the credit card. Skylar is still paying for his plane ticket three years later!
iii. Explain to participants that when only the minimum payment on a credit card is made, the cardholder pays high amounts of interest and makes slow progress towards paying off the credit card.
iv. Make sure to emphasize that if a credit card is paid in full every month, the cardholder will pay no interest.
If a credit card is paid in full every month, no interest is paid!

8. What is the difference between credit cards and debit cards?
Connected to an account that holds cardholder’s money
Money is immediately taken out of an account
Not connected to an account
Money is borrowed and paid back later
Debit Card - plastic card that is electronically connected to an account that holds cardholder’s money
h. Slide 8: What is the difference between credit cards and debit cards?
i. Ask participants to discuss within their groups what they believe is the difference between a
credit card and a debit card.
ii. Discuss the differences as a class emphasizing that debit card purchases are paid immediately while credit card purchases are paid back later.

9. How do you get a credit card?1. 2.
Examine credit card offers
Displays main costs of a potential credit card
Complete an application
i. Slide 9: How do you get a credit card?
i. Explain to participants that it is important to examine different credit card offers and choose the credit card that is best for you.
ii. Explain that once a credit card application is completed, the applicant isn’t guaranteed to be
approved for and receive the credit card.

10. Getting a Credit Card- Restrictions
Must be at least 21 years old
UNLESS
Show proof of sufficient income
Have a co-signer
j. Slide 10: Getting a Credit Card- Restrictions
i. Explain to participants that consumers under the age of 21 can only receive a credit card if they can prove that they have sufficient income to pay the borrowed money back or if they have a cosigner.
1. Stress the implications of being a cosigner. A cosigner is equally responsible for paying back the money borrowed.
If someone agrees to be a co-signer on an account, they are equally responsible for the loan

11. What are the advantages and disadvantages to using a credit card?
Convenient
Useful for emergencies
Often required to hold a reservation
Purchase expensive items earlier
Possibility of receiving bonuses, such as frequent flyer miles and cash rebates
Paying interest if balance is kept on card
Additional fees may apply if card is not used properly
Tempting to overspend
Responsible for lost/stolen cards
Risk of identity theft
k. Slide 11: What are the advantages and disadvantages to using a credit card?
i. Write “Advantages” and “Disadvantages” on the board.
ii. Have participants work in their groups to identify three advantages and three disadvantages of using a credit card and record these on their Take Charge of Credit Cards Note Taking Guide
1.6.1.L1.
iii. One participant from each group can come to the board and write their ideas under each heading.
iii. Discuss the advantages of having a credit card and add to the participants’ ideas with the advantages listed on Slide 11.
iv. Discuss the disadvantages of having a credit card and add to the participants ideas with the
disadvantages listed on Slide 11.

12. Responsible Credit Card UseDo
Don’t
Pay amount charged in full every month
Pay payments on time
Keep track of charges by keeping receipts
Check monthly credit card statement for errors
Make late payments
Pay only the minimum payment due
Go over the credit limit
Charge items that can’t be paid off within the month
l. Slide 12: Responsible Credit Card Use
i. Have participants work in their groups to identify three things that a person should do in regards to a credit card and three things a person should not do in regards to a credit card and record these on their note taking guide.
ii. Discuss the positive uses of a credit card and add to the participants’ ideas with the advantages listed on Slide 12.
iii. Discuss the negative uses of a credit card and add to the participants’ ideas with the disadvantages listed on Slide 12.

13. What happens when a credit card is used irresponsibly?
Late Payment Fee
Over-the-Limit Fee
Penalty APR
Charged when minimum payment is not made by due date
Charged if the amount of transactions goes over credit limit
Higher interest rate charged on new transactions
m. Slide 13: What happens when a credit card is used irresponsibly?
i. Explain to participants when a credit card is used negatively, the cardholder is often charged
penalty fees and higher penalty interest rates.
ii. Explain to participants that Penalty APR is usually charged in addition to the late payment and over-the-limit fees.
iii. Explain to participants that in addition to being charged fees and higher interest, a cardholder could pay large amounts of interest and accumulate large amounts of debt.

14. What is a Credit Card Statement?
Purpose
Includes
Summarizes important information from previous month
Transactions made
Amount owed
Minimum payment
Payment due date (date minimum payment is due)
n. Slide 14: What is a Credit Card Statement?
i. Discuss what a credit card statement is and what is included on a credit card statement.
ii. Ask participants to determine why it is important to examine a credit card statement.
1. To check for errors and fraudulent charges
2. To determine when the payment due date is to ensure the payment is made on time.
Why is it important to examine a credit card statement?

15. Credit Card Safety Tips
It is important to keep credit cards and credit card information secure to avoid someone else making charges
If a credit card is closed, notify the company in writing and by phone, then cut up card
Sign back of card with signature and “Please See I.D.”
Never give out a card number unless making purchases
Do not leave cards lying around
o. Slide 15-16: Credit Card Safety Tips
i. Explain to participants why it is important to keep credit cards and credit card information safe.
ii. Discuss the credit card safety tips.
iii. Illustrate Credit Card Safety Tips: Instruct participants to illustrate a credit card safety tip.
1. Pass out an extra piece of paper and if desired, crayons, markers, and/or colored pencils
to each participant.
2. Instruct participants to illustrate on the paper one of the credit card safety tips they just learned.
3. If time allows, have participants share their illustrations.

16. Credit Card Safety Tips
Lost or stolen card should be reported immediately to the credit card company
Keep a list of all cards, account numbers, and phone numbers separate from cards
Shred any credit card offers received
Check credit card statements for false charges; report any false charges immediately
Immediately reporting a lost or stolen credit card reduces the cardholder’s liability for any possible fraudulent purchases

17. Summary What is a credit card?
How can you avoid paying interest on a credit card?
What is the difference between a credit card and a debit card?
Plastic card that holds pre-approved credit
Used for the purchase of items now and payment of them later
Pay the credit card balance in full every month!
p. Slide 17: Summary
i. Assess participant learning by asking summary questions and discussing.
Debit card- money is taken from the cardholder’s account
Credit card- money is borrowed and paid back later

18. Remember….
If a credit card is used properly it can offer many benefits
Important to keep credit cards and credit card information secure
Use a credit card responsibly! Only charge items when there is no doubt about ability to pay off the charges
q. Slide 18: Remember…
i. Review some of the main points of the lesson.
Conclusion: Complete the What Would You Do? H2 activity.
a. Pass out one “What Would You Do? H2” to each group of participants.
b. Participants will read the scenarios and decide as a group what they would do in that situation.
c. Each group will take turns reading their scenario cards aloud and sharing what they would do in that situation.